By: Staff Writer

January 09, Colombo (LNW): The Securities and Exchange Commission (SEC) has approved a regulatory framework to facilitate the issuance and listing of Infrastructure Bonds on the Colombo Stock Exchange (CSE).

This landmark decision by the SEC is aimed at fostering both foreign and local investments in infrastructure projects that will contribute to the economic development and well-being of the country.

Infrastructure Bonds aim to raise capital for vital projects such as roads, rail, water management, waste management systems, airports, seaports, mixed development projects, natural disaster protection systems, deep water ports, gas supply systems, utility projects, telecommunications infrastructure etc. which are integral to economic growth and sustainability.

SEC said it is necessary for Sri Lanka to develop a market for Infrastructure Bonds and raise the long-term capital needed for infrastructure projects.

The scope of infrastructure development in emerging economies has evolved significantly in recent decades and now comprises a broad range that includes traditional infrastructure projects such as power, oil and gas, and water as well as low-carbon, climate-resilient infrastructure such as renewable energy projects.

SEC carried out a study of comparable jurisdictions which had successfully used Infrastructure Bonds listed in the capital market to finance major development projects of their respective Governments.

Aimed at fostering development, transparency, and investor confidence in the capital market, the SEC has set a Capital Market Reforms Agenda which includes 12 key areas for action.

The introduction of infrastructure financing products are part of the Reforms Agenda and is strategically designed to propel the capital market to new heights and contribute significantly to its growth and sustainability.

The regulatory framework for Infrastructure Bonds has provisions to ensure investor protection, stringent due diligence, disclosure, and reporting requirements for issuers in order to keep investors informed on the performance of the infrastructure projects.

They will also inform utilization of proceeds and risk factors pertaining to the infrastructure projects as well as enforcement procedure for non-compliance with the regulatory framework.

Disclosure requirements include details of the project in which the capital raised is deployed or allocated, progress updates on how the project fulfils its core purpose and objectives and benefit to the public at large, and any deviations in the use or allocation of the capital proceeds.

This initiative reflects SEC’s commitment to create an enabling environment for long-term investments in infrastructure projects that support the nation’s economic growth and development.

SEC Chairman Faizal Salieh said: “The misallocation of capital is a root cause of our economic crisis. It is our objective to enable instruments that can raise long-term capital for development projects and provide investor assurance that such capital is allocated to the project’s stated purpose with transparency and accountability.

By: Staff Writer

January 09, Colombo (LNW): Sri Lanka’s central bank will be lowering interest rates further in an unexpected move to boost growth, while projecting inflation would remain subdued over the medium term in the second quarter this year.

Helped by its bailout by the International Monetary Fund, the South Asian island nation is recovering from its worst financial crisis in seven decades and awaiting the finalisation of its first review from the global lender.

Economists expect Sri Lanka’s central bank to pause now but resume its rate cut cycle in the second quarter of this year to bolster the island nation’s recovery after an unprecedented crisis.

With this reduction, further easing will be paused in the near term, it added, given that space exists for market interest rates to adjust downwards and reiterated the need for that to happen to ease domestic monetary conditions further.

The standing lending facility rate, currently at 10%, is seen to stay on hold for a quarter and be followed by a cut of 50 basis points in the April-June period, according to the latest median estimates in a Bloomberg survey.

After reducing borrowing costs by 650 basis points last year, Sri Lanka’s central bank signaled it will pause as the economy gradually turns around and inflation bottoms out.

“While the economy is now recovering from the political and economic crisis, it remains very weak, with output around 20% below its pre-crisis peak,” said Gareth Leather, economist at Capital Economics.

The central bank will keep monetary policy unchanged at its next review, but the pause won’t last for long, he said, penciling rate cuts of 200 basis points this year.

With demand gathering pace, analysts expect consumer prices to inch up. The survey showed economists raising their outlook on headline inflation through 2024, with the first and second quarters’ forecasts at 6% and 7%, respectively.

The International Monetary Fund has so far disbursed a total of $670 million under its bailout plan, helping Sri Lanka in overcoming shortages of food, fuel and raw materials. Authorities are in the process of restructuring the nation’s debt to secure more funds.

Sri Lanka’s economy is seen to expand 3.3% this year from a contraction of 2.5% in 2023, the survey showed.

By: Staff Writer

January 09, Colombo (LNW): Sri Lanka plans to start claiming credits from greenhouse gas emission savings in green projects such as hydropower and garbage management, joining other developing Asian countries in profiting from the Kyoto Protocol and the Paris Agreement.

The government is now strengthening the framework for monitoring, reporting and verification, and for registry needs and made internationally compatible, Finance Ministry sources said.

It has ambitious carbon-reduction targets under its Nationally Determined Contribution to the United Nations Framework for Combatting Climate Change.

Quantum Commodity Intelligence – A Sri Lankan firm which has teamed up with the country’s environment ministry in a blockchain-based initiative to create a new carbon standard and registry is planning to launch a carbon credit marketplace in 2024.

SavePlanetEarth said its Planetary Carbon Standard (PCS), a strategic partnership with the Sri Lanka Climate Fund under the Ministry of Environment, uses blockchain technology, to ensure transparency and traceability in carbon credit transactions plus advanced remote sensing and AI technologies for precise monitoring and verification of carbon sequestration projects.

The PCS website describes it as “a simplified version of existing carbon standards,” developed by SPE for “assessing, monitoring, estimating, verifying, and validating carbon sequestration of afforestation and reforestation projects, as well as evaluating carbon negative effects of tenewable energy projects.”

“Despite its potential, the carbon credit market faces significant challenges that undermine its effectiveness and credibility,” SPE said.

“Greenwashing, quality and integrity of credits, double counting, and complexity and accessibility are critical issues that SavePlanetEarth’s Planetary Carbon Standard aims to address.”

The company said it has developed a digital platform to streamline the carbon credit certification process, adding that the platform “democratizes access to carbon trading, allowing project owners of all sizes to participate easily and effectively.”

SPE plans to launch its marketplace in 2024, aiming to provide “a transparent, efficient, and reliable platform for trading carbon credits,” backed by the technology that powers the PCS.

“With millions of hectares under application from Africa and a significant amount of credits already approved for sale, the marketplace is poised to set new standards in the carbon credit industry,” SPE said.

The PCS website currently lists three verified projects, one of which – the Tokenize Amazon Project in Brazil – has just over 1.7 million credits for sale.

The other two projects listed – a bamboo afforestation project in Kenya and a hydropower renewable energy project in Sri Lanka – currently have no credits for sale, although the Kenyan project has 900,000 credits under evaluation.

Sri Lanka’s Carbon Crediting Scheme (SLCCS) supports greenhouse gas emission reduction and enables companies to earn SL Certified Emission Reduction Units (SCERs) for their efforts to reduce emissions.

The government will have to set a price benchmark by announcing what its carbon tax rate will be for the next three to four years.